I am including my son(freshman collage) as a dependent in my tax return and reporting his 1098-T and 1099-Q in my return. I can not claim any education tax credits as my income is beyond the limit.
But however when I add theses forms in Turbotax, it says that "the student beneficiary must reports $1520 of taxable income from his distribution". The expenses reported on 1098-T in box 1 ($26,263) is higher then the gross distribution ($25,828) on 1099-Q. Only scholarship he has on 1098-T in box 5 is $40.
If qualified expense is higher then the 529 distribution then why it want my son to file return and report the $1520 as taxable income?
